COCOBOD to Borrow $250 Million for Purchases

9/1/2011 5:05:54 PM

Extra amount sought in case of larger 2011/12 crop season.

The Ghana Cocoa Board, which markets the commodity in the West African country, intends to borrow $250 million more than planned in a trade-finance loan on expectations that next season’s crop will be larger than estimated, Deputy Chief Executive Officer Yaw Adu-Ampomah said.

“We will ask the banks to make provision for $2 billion although we will actually need $1.75 billion if we have any emergencies,” he said in a telephone interview from the capital, Accra, yesterday. The loan applies to the 2011-12 season, which runs from Oct. 1 through Sept. 30, 2012.

Ghana, the world’s second-largest cocoa producer after neighboring Ivory Coast, borrows funds every year to ensure supply is available for international buyers. The board has 13 lenders including Ghana International Bank arranging the loan and will pay an initial interest of 65 basis points more than the London interbank offered rate, according to data compiled by Bloomberg. That compares with 90 basis points above Libor on a $1.5 billion loan that expires on Sept. 22.

The nation, which expects output to exceed 1 million metric tons of the beans by the close of the 2010-11 season, aims to produce 1.1 million tons in 2011-12 through increased yields, board Chief Executive Officer Kwabena Asante-Poku said on Aug. 25.

The country intends to maintain production between 1 million tons to 1.2 million tons in the coming seasons, Adu- Ampomah said.

“We project that from the 2012/2013 season, subsidized fertilizer usage by farmers will cover 50 percent of all farms,” he said. Spraying of pesticides in preparation for the next season started in early August and will continue in all farms till December, Adu-Ampomah said.

Cocoa for December delivery headed for the highest close in more than a week on NYSE Liffe, adding 5 pounds, or 0.3 percent, to 1,954 pounds by 10:10 a.m. in London.